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Unilateral Refusals to Deal in Intellectual and Other Property

The recent trend in the federal courts has been to reduce the already limited potential antitrust liability faced by dominant firms that individually refuse to supply their rivals with goods or services the latter need to compete. However, important differences have emerged among courts in the extent to which they allow antitrust to reach refusals to supply property protected by intellectual property rights. Courts have differed over whether a firm’s unilateral refusal to supply a rival with IP should be judged under the Section 2 approach that applies to other (non-IP) property or instead should be exempted from normal antitrust scrutiny. Some circuit courts treat refusals to supply IP as susceptible to rule-of-reason inquiry under Section 2 of the Sherman Act whereas at least one court, the U.S. Court of Appeals for the Federal Circuit, essentially exempts refusals to deal in IP from that antitrust inquiry. This article argues that neither economics nor IP policy considerations provide a sound basis for exempting refusals to supply IP from antitrust law’s general liability standard for unilateral refusals to deal. Where antitrust enforcement treats IP deferentially, it should be because in a particular case there is a link between IP and the innovation and competition considerations that in most cases weigh against antitrust mandates to deal in any property. Sometimes those factors will be magnified where IP is at stake; but they are not so systematically different for intellectual property that refusals to supply IP should be exempted from the antitrust standard applicable to other property.